Existing law, the Mobilehome Residency Law, governs the term and conditions of mobilehome park tenancies. Existing law, if the management of a mobilehome park elects to separately bill water utility service to homeowners, limits charges and fees on homeowners in connection with those services to specified types of charges and fees.

Existing law authorizes the Public Utilities Commission to regulate public utilities, including water corporations. Under existing law, a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the commission if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation.

This bill would provide that a person or other entity that maintains a mobilehome park or a multiple unit residential complex, and provides water service through a submeter service system, is exempt from regulation as a public utility if management of the mobilehome park complies with the limitations on charges and fees provided for in the Mobilehome Residency Law. This bill would also provide that those limitations on charges and fees in connection with water utility service apply to all management that elects to separately bill water utility service to homeowners, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the commission.

Existing law, the Mobilehome Residency Law, governs the term and conditions of mobilehome park tenancies. Existing law, if the management of a mobilehome park elects to separately bill water utility service to homeowners, limits charges and fees on homeowners in connection with those services to specified types of charges and fees.

Existing law authorizes the Public Utilities Commission to regulate public utilities, including water corporations. Under existing law, a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the commission if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation.

This bill would provide that a person or other entity that maintains a mobilehome park or a multiple unit residential complex, and provides water service through a submeter service system, is exempt from regulation as a public utility if management of the mobilehome park complies with the limitations on charges and fees provided for in the Mobilehome Residency Law. This bill would also provide that those limitations on charges and fees in connection with water utility service apply to all management that elects to separately bill water utility service to homeowners, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the commission.

Existing law, the Mobilehome Residency Law, governs the term and conditions of mobilehome park tenancies. Existing law, if the management of a mobilehome park elects to separately bill water utility service to homeowners, limits charges and fees on homeowners in connection with those services to specified types of charges and fees.

Existing law authorizes the Public Utilities Commission to regulate public utilities, including water corporations. Under existing law, a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the commission if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation. Under existing law, a mobilehome park that provides water service only to its tenants from water supplies and facilities that it owns, not otherwise dedicated to public service, is not a water corporation, but that mobilehome park is subject to the jurisdiction of the commission to the extent that, if a complaint is filed with the commission by tenants of the mobilehome park that represent 10% or more of the parks water service connections during any 12-month period, claiming that the water rates charged by the park are not just and reasonable or that the service is inadequate, the commission has jurisdiction to determine the merits of the complaint and determine whether the rates charged are just and reasonable and whether the water service provided is adequate. Existing law prohibits the commission from making an order for the payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question has been previously declared by formal finding of the commission to be reasonable.

This bill would prohibit the commission from making an order for the payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question complies with limitations on charges and fees in connection with water utility service under the Mobilehome Residency Law. The bill would provide that a person or other entity that maintains a mobilehome park or a multiple unit residential complex, and provides water service through a submeter service system, is exempt from regulation as a public utility if management of the mobilehome park complies with those the limitations on charges and fees. fees provided for in the Mobilehome Residency Law.

This bill would also provide that those limitations on charges and fees in connection with water utility service apply to all management that elects to separately bill water utility service to homeowners, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the commission.

Existing law, the Mobilehome Residency Law, governs the term and conditions of mobilehome park tenancies. Existing law, if the management of a mobilehome park elects to separately bill water utility service to homeowners, limits charges and fees on homeowners in connection with those services to specified types of charges and fees.

Existing law authorizes the Public Utilities Commission to regulate public utilities, including water corporations. Under existing law, a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the commission if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation. Under existing law, a mobilehome park that provides water service only to its tenants from water supplies and facilities that it owns, not otherwise dedicated to public service, is not a water corporation, but that mobilehome park is subject to the jurisdiction of the commission to the extent that, if a complaint is filed with the commission by tenants of the mobilehome park that represent 10% or more of the parks water service connections during any 12-month period, claiming that the water rates charged by the park are not just and reasonable or that the service is inadequate, the commission has jurisdiction to determine the merits of the complaint and determine whether the rates charged are just and reasonable and whether the water service provided is adequate. Existing law prohibits the commission from making an order for the payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question has been previously declared by formal finding of the commission to be reasonable.

This bill would prohibit the commission from making an order for the payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question complies with limitations on charges and fees in connection with water utility service under the Mobilehome Residency Law. The bill would provide that a person or other entity that maintains a mobilehome park or a multiple unit residential complex, and provides water service through a submeter service system, is exempt from regulation as a public utility if management of the mobilehome park complies with those limitations on charges and fees.

This bill would also provide that those limitations on charges and fees in connection with water utility service apply to all management that elects to separately bill water utility service to homeowners, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the commission.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 604

Author:(Lee)

As Amended Ver:July 12, 2023

Majority vote

SUMMARY

Applies existing rules regarding mobilehome park management's separate billing of water service provided via submeter to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the California Public Utilities Commission (CPUC).

Senate Amendments

1. Delete the proposed prohibition on the CPUC, in investigating a water rate or service complaint by tenants of a mobilehome park that provides water service to its tenants from water supplies and facilities that it owns, from making an order for payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question complies with existing rules regarding submeter charges.

COMMENTS

Mobilehome Parks and Water Billing Practices: Water service within mobilehome parks can be organized in several different ways. Some mobilehome parks provide water service to park residents by buying the water from a water supplier, passing the water on to the residents through a submeter, and then sending a bill to each resident. That water bill generally includes a charge for the amount of water the resident consumed and one or more additional water service fees. The law previously capped those additional water service fees at the amount that the water supplier could have legally charged each resident if the water supplier was delivering the water to the residents directly. However, it may in fact cost the park less than that to deliver water to the residents, meaning unscrupulous parks could potentially turn a profit by acting as the intermediary.

To prevent mobilehome parks from padding their water service fees and profiting off of the delivery of water in this way, AB 1061 (Lee), Chapter 625, Statutes of 2021, limited parks to charging tenants three separate amounts for water: one charge for the actual volume of water consumed, one charge to cover the resident's share of whatever recurring fixed amount the water supplier charges the park, and one charge to cover the park's administrative costs. Each charge is calculated according to specified formulas, including a standard service fee calculation of the lesser of 25% of the volumetric water charge or $4.75, thus preventing parks from padding resident's bills with unexplained additional fees. Additionally, the $4.75 service fee can be adjusted annually based on the Consumer Price Index (CPI), a standard measure that accounts for variation in the cost of consumer goods over time. This mirrors rules that were enacted by SB 7 (Wolk), Chapter 623, Statutes of 2016, which apply to master-meter/submeter systems in multi-family housing.

A subset of the mobilehome parks who buy water from a water supplier and pass the water on to residents through a submeter system are purchasing water from a water corporation that is subject to the jurisdiction of the CPUC. Existing law provides that those mobilehome parks are not considered public utilities subject to the jurisdiction of the CPUC if each use of the submeter service system is charged at the rate that would be applicable if the user were instead receiving water directly from the water corporation.

Other mobilehome parks own a water source – in many cases, a well – and provide water to their residents as the owner of the actual water supply. In response to concerns about water service in these mobilehome parks, the Legislature enacted changes in the 1990s which provided that, although mobilehome parks providing tenants water service with their own water supply were not utilities, the CPUC could investigate complaints from tenants and award "rate relief."

AB 1830 (Pérez), Chapter 539, Statutes of 2012, also expanded the CPUC's authority to order a park to provide restitution for past overcharges of water rates, as well as required mobilehome parks to provide notice of residents' right to file complaints about water rates and service with the CPUC. That bill also changed the authority for the CPUC to investigate rates and adequacy of water service if at least 10 percent of the population of a mobilehome park petitions the CPUC for relief.

This Bill: Since AB 1061 (Lee) went into effect, a question has been raised regarding the applicability of the rate calculation rules to parks that are subject to CPUC oversight, either by virtue of purchasing water from a CPUC-regulated water corporation, or by providing water from supplies the park actually owns. This bill explicitly provides that the billing rules in AB 1061 (Lee) apply to instances where the water purveyor or the mobilehome park itself is subject to the jurisdiction, control, or regulation of the CPUC. This bill further provides that, for parks purchasing water from a CPUC-regulated water corporation, the park will continue to remain exempt from CPUC jurisdiction so long as management either continues to charge the rate which would be applicable if residents were direct customers of the water corporation, or charges the rates based on the calculations established in AB 1061 (Lee).

According to the Author

"AB 1061 which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee.

However, since them, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. AB 604 amends the Civil Code to clarify the scope of its protections to include all mobilehome residents."

Arguments in Support

According to the Golden State Manufactured-home Owners League (GSMOL), the bill's sponsor, "In 2021, Assembly Member Lee championed AB 1061, which extended consumer protections to residents living in mobilehomes. These protections were approved by the state to protect consumers of water in sub-metered circumstances from excessive charges. We don't object to paying for the water we consume. And, we should pay our pro-rata share of services charges water companies bill park owners. What isn't fair is when water is sub-metered and then park owners mark up the price of water and in turn make an unfair profit. Some parks are making around a quarter million dollars a year. However, despite AB 1061 being passed into law, park owners continue to multiply water service charges to each home space through the park and in some cases they are making up their own charges. For this reason, GSMOL supports AB 604, which provides additional clarity."

Arguments in Opposition

According to the Western Manufactured Housing Communities Association (WMA), "Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. If the State of California values water conservation and CPUC regulatory authority, AB 604 as drafted should be defeated as it does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies. The CPUC should serve as the model for water delivery, conservation and reimbursement given their expertise in this area. We should have the experts create this policy, not arbitrary legislation that has unintended consequences."

FISCAL COMMENTS

According to the Assembly Appropriations Committee, the CPUC anticipates negligible costs as a result of this bill and asserts the language in the bill is redundant and unnecessary.

VOTES:

ASM HOUSING AND COMMUNITY DEVELOPMENT: 6-2-0

YES: Wicks, Wendy Carrillo, Gabriel, Juan Carrillo, Quirk-Silva, Ward

NO: Joe Patterson, Sanchez

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Wilson

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Bryan

ASSEMBLY FLOOR: 49-13-18

YES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pellerin, Petrie-Norris, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO: Davies, Dixon, Essayli, Flora, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

ABS, ABST OR NV: Alanis, Calderon, Chen, Megan Dahle, Vince Fong, Gallagher, Grayson, Holden, Stephanie Nguyen, Pacheco, Papan, Quirk-Silva, Ramos, Rodriguez, Blanca Rubio, Soria, Valencia, Villapudua

SENATE FLOOR: 30-7-3

YES: Allen, Archuleta, Ashby, Atkins, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener

NO: Alvarado-Gil, Dahle, Grove, Jones, Niello, Seyarto, Wilk

ABS, ABST OR NV: Becker, Nguyen, Ochoa Bogh

UPDATED

VERSION: July 12, 2023

CONSULTANT: Nicole Restmeyer / H. & C.D. / (916) 319-2085 FN: 0001849

 THIRD READING  

Bill No: AB 604

Author: Lee (D)

Amended: 7/12/23 in Senate

Vote: 21

SENATE JUDICIARY COMMITTEE: 9-2, 6/20/23

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Min, Stern, Wiener

NOES: Wilk, Niello

SENATE ENERGY, U. & C. COMMITTEE: 15-2, 7/10/23

AYES: Bradford, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Grove, McGuire, Min, Newman, Rubio, Skinner, Stern

NOES: Dahle, Seyarto

NO VOTE RECORDED: Wilk

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 49-13, 4/24/23 - See last page for vote

SUBJECT: Mobilehome parks: water utility charges

SOURCE: Golden State Manufactured-Home Owners League

DIGEST:

This bill proposes to clarify the charges and fees that can be assessed by management of mobilehome parks that elect to provide submetered water service to tenants, and clarifies they are subject to a requirement that they charge proportional rates, under the limitations of the Mobilehome Residency Law (MRL).

ANALYSIS:

Existing law:

1. Authorizes the California Public Utilities Commission (CPUC) to regulate public utilities, including water corporations, and requires all rates charged and services provided by public utilities are just and reasonable. (Article XII of the California Constitution, Public Utilities Code §§216 and 451)
2. Provides that a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation. (Public Utilities Code §2705.5)
3. Provides that a mobilehome park that provides water service only to its tenants from water supplies and facilities that it owns, not otherwise dedicated to public service, is not a water corporation, but that mobilehome park is subject to the jurisdiction of the CPUC to the extent that, if a complaint is filed with the CPUC by tenants of the mobilehome park that represent 10 percent or more of the park’s water service connections during any 12-month period, claiming that the water rates charged by the park are not just and reasonable or that the service is inadequate, the CPUC has jurisdiction to determine the merits of the complaint and determine whether the rates charged are just and reasonable and whether the water service provided is adequate. (Public Utilities Code §2705.6)
4. Prohibits the CPUC from making an order for the payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question has been previously declared by formal finding of the CPUC to be reasonable. (Public Utilities Code §2705.6(e))
5. Establishes the MRL which governs the terms and conditions of mobilehome park tenancies to regulate the relationship between mobilehome park management and park residents, and establishes various rights, responsibilities and limits of both groups. (Civil Code §798 et seq.)
6. Limits charges and fees, as part of the MRL, on homeowners in connection with water services to specified types of charges and fees if the management of a mobilehome park elects to separately bill water utility service to homeowners. Mandates that management of mobilehome parks must post in a conspicuous place the specific current residential utility rate schedule published by the serving utility, or the internet website address where the current residential utility rate is published by the utility. Requires the management of mobilehome parks to make available, at no cost, the current rate upon a request of a resident, and must state that it is available in their posting. (Civil Code §798.40(a))
7. Defines “water purveyor” to mean any person who furnishes water service to another person. Defines “person” to mean any individual, firm, association, partnership, corporation, or public entity of any kind. (Water Code §§512 and 513)
8. Limits the rates that a mobilehome park can charge if the park elects to separately bill water service to a homeowner and provide submetered water service as a master-meter customer of the water purveyor. These limits are that:
   1. The park must charge for water based on volumetric usage, and sets out three methods which the mobilehome park may use to calculate the volumetric usage; and
   2. For any recurring fixed charge that is charged to the mobilehome park by the water purveyor, that the park may bill residents for this fixed charge either by the resident’s proportion of the park’s total volumetric usage of water, or by billing the residents equally for their share of the total. (Civil Code §798.40(c)(2))
9. Establishes limits on the billing, administrative, or other fee charged by the park for management’s and the billing agent’s costs in billing residents separately for their submetered water. This fee must be the lesser of either $4.75, or 25 percent of the amount billed for each resident’s volumetric usage. The maximum fee under this paragraph can be adjusted annually based on a commensurate increase in the Consumer Price Index based on a California fiscal year average for the previous fiscal year, for all urban consumers, as determined by the Department of Finance. (Civil Code §798.40(c)(3))
10. Authorizes any mobilehome park management to bill homeowners separately for fees and charges assessed by the utility provider of natural gas or liquid propane gas, electricity, water, cable television, garbage or refuse service, or sewer service for the residents’ spaces in the park, unless the rental agreement states otherwise. States that separate utility fees and charges are not rent, or to be considered a rent increase for the purposes of any local ordinance or rule for rent control, as long as base rent calculations for the space are reduced by the separately-billed fees and charges when separate billing has begun. (Civil Code §798.41)
11. Requires mobilehome park management who elects to bill utility services separately to state any utility fees and charges for such utility services on any monthly or other periodic billing to the homeowner. If the fee or charge has a limited duration or is amortized for a specified period, the expiration date shall be stated on the initial notice and each subsequent billing to the homeowner while the fee or charge is billed to the homeowner. (Civil Code §798.41(d))

This bill:

1. Clarifies that management of a mobilehome park that separately bills for water service and provides submeter water service as a master-meter customer of a water purveyor must comply with the limitations on charges and fees for master-meter/submeter arrangements established in the MRL and is exempt from regulation as a public utility, even if the water purveyor is subject to the jurisdiction, control, or regulation CPUC.
2. Clarifies that those limitations on charges and fees in connection with water utility service apply to all management that elects to separately bill water utility service to homeowners under a master-meter/submeter arrangement, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the CPUC.

Background

1. Mobilehome parks. There are an estimated 508,589 mobile home units in California, according to the U.S. Census Bureau, 2021 American Community Survey 1-Year Estimates (2021). Mobilehome residents in California tend to be poorer and older than the average renter, for which mobilehome ownership is an important option for affordable housing. Many mobilehome residents own their mobilehome, but lease the land upon which their home is located from the mobilehome park that owns and manages the land and park. Under this relationship, while residents technically own their mobilehome, they pay rent to the park management and often rely on the park for the provision of utilities.
2. Mobilehome parks and water service. Mobilehome parks frequently provide water service to tenants through a master-meter arrangement, whereby the park management receives water service from a utility and then bills tenants of the park for the cost of the water. In some cases, the management of the mobilehome park installs separate submeters to bill tenants individually. In these arrangements, the park owner/management is billed directly by the water utility and then the management bills the park tenants/homeowners themselves, often separate from the rent. However, in some cases, mobilehome parks provide tenants water service with the park’s own water supplies and facilities, such as water from a well. In these cases, the mobilehome park owners are not master-meter customers of a water utility.
3. Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set water rates for customers. The CPUC has regulatory oversight over water corporations that provide water service to about 16 percent of California’s residents. These water corporations generate annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of the residents served by water corporations are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately a total of 1.175 million customers). As with other investor-owned utilities, the CPUC regulates rates of the water corporation under its jurisdiction.
4. Mobilehome parks exempted from public utility regulation. In 1983, legislation was enacted, AB 1005 (Costa, Chapter 339, Statutes of 1983), that exempted mobilehome parks that provide water service via a master-meter/submeter arrangement from regulation as a public utility subject to the regulatory authority and control of the CPUC. Specifically, Public Utilities Code §4505.5 provides that mobilehome parks that provide water service through a submeter service system are NOT a public utility if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation.
5. CPUC oversight for customer complaints for water service provided by mobilehome park’s own water supply – not master-meter/submeter arrangement. AB 290 (Clute, Chapter 349, Statutes of 1991) and SB 585 (Craven, Chapter 689, Statutes of 1995) were enacted to authorize the CPUC to address tenant complaints at mobilehome parks providing water service with their own water supply (not as a master-meter customer with supply from a utility). The legislation provided that although these mobilehome parks were not public utilities, tenants of the parks could bring complaints to the CPUC to determine whether the rates charged are just and reasonable and service is adequate. The statutes also afforded the CPUC with the authority to provide rate relief and direct the mobilehome park owners to upgrade service. This section of the Public Utilities Code, Section 2705.6, was further expanded by legislation, AB 1830 (Pérez, Chapter 539, Statutes of 2012), which stipulated that the CPUC could review rates where at least 10 percent of tenants within a 12-month period filed complaints that the rates are not just and reasonable. The legislation also required the mobilehome park owner/management to provide written notice to tenants about their rights to file complaints with the CPUC. The bill also required the mobilehome park owner/management to reimburse tenants if the CPUC finds rates charged are unjust and unreasonable.
6. Mobilehome Park Residency Law. The MRL was passed by the Legislature in 1978 to regulate the relationship between mobilehome park management and park residents, and establish various rights, responsibilities and limits of both groups. Over time, the MRL has been amended to include additional protections for residents and limits on charges mobilehome parks can bill residents. One of the subjects addressed by the MRL are utilities which was recently expanded by AB 1061 (Lee, Chapter 625, Statutes of 2021). AB 1061 was enacted to help address concerns that mobilehome parks were charging arbitrary administrative fees in master-meter/submeter arrangements for water service. The bill establishes specific limits on what mobilehome parks management can charge residents when they provide submetered water services as part of a master-meter arrangement whereby the park owner receives water service from a utility or other third-party water provider. These limits tied charges to each residents’ proportional, volumetric usage of the park’s water, and limited additional administrative charges for providing submetered service to the lesser of either $4.75 or 25 percent of a resident’s volumetric usage. This $4.75 limit was modeled after SB 7 (Wolk, Chapter 623, Statutes of 2016), a bill passed in 2016 that similarly regulated how submetered water service can be billed in the context of apartment buildings. Through this rubric, AB 1061 provided exact formulas for how the charges may be calculated by mobilehome park management, and sought to limit unscrupulous parks from padding their water service fees and profiting from this master-meter/submetered arrangement. However, the changes made by AB 1061 do not include water service provided by a mobilehome park’s own water supplies, since that service is not provided as a master-meter customer of a water utility.

Comments

1. Need for this bill. A Legislative Counsel Opinion would suggest no additional legislation is needed. However, the proponents of this bill contend that some mobilehome park owners argue that they are not subject to AB 1061 and its formula because they receive or provide service that is regulated by the CPUC. The author of this bill asked Legislative Counsel “whether section 798.40 [Civil Code] applies to the management of an MHP [mobilehome park] that elects to separately bill water service to a homeowner as a utility service, and to provide submetered water to homeowners, if that MHP is a master-meter customer of a CPUC-regulated water corporation.” According to the Legislative Counsel Opinion shared with the committee, Legislative Counsel Opinion Request #2302359 (April 4, 2023) concluded that “section 798.40 applies to the management of an MHP that elects to separately bill water service to a homeowner as a utility service, and to provide submetered water to homeowners, if that MHP is a master-meter customer of a CPUC-regulated water corporation.”
2. Confusion regarding water service at mobilehome parks. It is likely that mobilehome park tenants and others may not understand the distinction between the varied approaches to providing water service at parks, and therefore, the applicable laws concerning rates for water utility service. As noted above water service provided by mobilehome parks is already not subject to regulation by the CPUC. However, customers of water service that is provided by the park’s own water supply are afforded a venue at the CPUC to file complaints and seek rate relief. It’s very likely that the confusion in the community stems from the distinctions between water service provided by a mobilehome parks via a master-meter customer of a water utility and those services provided by a mobilehome park’s own water supply, as well as, disagreement with the charges adopted in AB 1061.

While proponents of this bill may have wished to apply the MRL provisions to the all water service provided by mobilehome parks, the distinction between water service provided via master-meter customer of a water utility and water service provided by a park’s own water supply is necessary, and reasonable as provided in the current statutes. In the case of a master-meter customer arrangement, the management of the mobile home park is strictly administering the costs billed to it by the water utility and divvying them up among tenants, plus a limited administrative fee. Therefore, the intent in the statute is to ensure tenants are not charged extra costs beyond the costs of the water utility service billed plus an additional, but limited, administrative fee to handle the submeter billing. The idea is that park management will be able to recoup the full costs of the water utility service they are billed by the water utility, including under the prescribed submetered billing addressed in Civil Code Section 798.40, but not be allowed to bill higher amounts. However, in the case of a mobilehome park owning and operating their own water system, those costs will vary by the need to maintain the system which can require upgrades and maintenance. Limiting those costs to those prescribed in the MRL by AB 1061 could risk inadequate water service for tenants, as the costs prescribed could fall short of the needs of ensuring safe, reliable service. As noted above, the statutes today already afford these tenants the option to seek rate relief from the CPUC should the charges be unjust and unreasonable. This bill should not change that option and protection for these tenants or limit fees to those in the MRL as the water service may be put at risk.

Related/Prior Legislation

AB 1061 (Lee, Chapter 625, Statutes of 2021) prohibited mobile home park management from charging residents more than their proportional share of the water service charges paid by the mobile home park to the water provider, plus a reasonable management fee.

SB 1117 (Monning, Chapter 164, Statutes of 2020) ensured consumer protections for electrical and gas service are extended to tenants of mobilehome parks and other similar residential complexes.

SB 7 (Wolk, Chapter 623, Statutes of 2016) required, as of January 1, 2018, that individual water meters, also called submeters, be installed on all new multifamily residential units or mixed commercial and multifamily units, and requires that landlords bill residents for the increment of water they use.

AB 1830 (Pérez, Chapter 539, Statutes of 2012) authorized the CPUC to order a mobilehome park to reimburse a tenant, if it finds that the park has charged an unreasonable rate for tenant water services.

SB 585 (Craven, Chapter 689, Statutes of 1995) extended indefinitely the January 1, 1995 sunset of AB 290 (Clute, 1991) that established CPUC jurisdiction over the complaints of tenants of mobilehome parks that provide water service to their own residents through their own facilities.

AB 290 (Clute, Chapter 349, Statutes of 1991) which provided that, although mobilehome parks providing tenants water service with their own water supply were not public utilities, the CPUC can investigate complaints from tenants and award rate relief. The bill had a sunset of January 1, 1995.

AB 1005 (Costa, Chapter 339, Statutes of 1983) exempted owners of mobilehome parks or a multiple unit residential complex and provides water service to users through a submeter service system if each is charged at the rate which would be applicable if the user were receiving water directly from the water public utility.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/15/23)

Golden State Manufactured-Home Owners League (source)
County of Santa Cruz

Santa Cruz County Manufactured and Mobile Home Commission

OPPOSITION: (Verified 8/15/23)

California Mobilehome Parkowner’s Alliance
Western Manufactured Housing Communities Association

ARGUMENTS IN SUPPORT: According to the author:

AB 1061 [Lee] which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee. However, since then, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. AB 604 amends the Civil Code to clarify the scope of its protections to include all mobilehome residents.

ARGUMENTS IN OPPOSITION: According to the Western Manufactured Housing Communities Association (WMA):

Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. If the State of California values water conservation and CPUC regulatory authority, AB 604 as drafted should be defeated as it does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies. The CPUC should serve as the model for water delivery, conservation and reimbursement given their expertise in this area. We should have the experts create this policy, not arbitrary legislation that has unintended consequences.

ASSEMBLY FLOOR: 49-13, 4/24/23

AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pellerin, Petrie-Norris, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NOES: Davies, Dixon, Essayli, Flora, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

NO VOTE RECORDED: Alanis, Calderon, Chen, Megan Dahle, Vince Fong, Gallagher, Grayson, Holden, Stephanie Nguyen, Pacheco, Papan, Quirk-Silva, Ramos, Rodriguez, Blanca Rubio, Soria, Valencia, Villapudua

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

8/16/23 14:42:35

**** END ****

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: AB 604 Hearing Date: 7/10/2023

SUBJECT: Mobilehome parks: water utility charges

DIGEST: This bill places limits on the California Public Utilities Commission (CPUC) existing authority to address unjust and unreasonable rates on mobilehome parks that own and operate their own water supply, including limiting the ability to provide reimbursement to the tenants of the park or address the adequacy of the service. This bill also proposes to clarify that all mobilehome parks that elect to provide submetered water service, and bill separately for that service, are subject to a requirement that they charge proportional rates for such submetered water service, under the limitations on charges and fees in connection with water utility service under the Mobilehome Residency Law (MRL).

ANALYSIS:

Existing law:

1. Authorizes the CPUC to regulate public utilities, including water corporations, and provides the CPUC to ensure rates are just and reasonable. (Article XII of the California Constitution, Public Utilities Code §§216 and 451)
2. Provides that a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation. (Public Utilities Code §2705.5)
3. Provides that a mobilehome park that provides water service only to its tenants from water supplies and facilities that it owns, not otherwise dedicated to public service, is not a water corporation, but that mobilehome park is subject to the jurisdiction of the CPUC to the extent that, if a complaint is filed with the CPUC by tenants of the mobilehome park that represent 10 percent or more of the park’s water service connections during any 12-month period, claiming that the water rates charged by the park are not just and reasonable or that the service is inadequate, the CPUC has jurisdiction to determine the merits of the complaint and determine whether the rates charged are just and reasonable and whether the water service provided is adequate. (Public Utilities Code §2705.6)
4. Prohibits the CPUC from making an order for the payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question has been previously declared by formal finding of the CPUC to be reasonable. (Public Utilities Code §2705.6(e))
5. Establishes the MRL which governs the terms and conditions of mobilehome park tenancies to regulate the relationship between mobilehome park management and park residents, and establish various rights, responsibilities and limits of both groups. (Civil Code §798 et seq.)
6. Limits charges and fees, as part of the MRL, on homeowners in connection with water services to specified types of charges and fees if the management of a mobilehome park elects to separately bill water utility service to homeowners. Mandates that parks must post in a conspicuous place the specific current residential utility rate schedule published by the serving utility, or the internet website address where the current residential utility rate is published by the utility. Requires the park to make available free of charge the current rate upon a request of a resident, and must state that it is available in their posting. (Civil Code §798.40(a))
7. Defines “water purveyor” to mean any person who furnishes water service to another person. Defines “person” to mean any individual, firm, association, partnership, corporation, or public entity of any kind. (Water Code §§512 and 513)
8. Limits the rates that a mobilehome park can charge if the park elects to separately bill water service to a homeowner and provide submetered water service as a master-meter customer of the water purveyor. These limits are that:
   1. the park must charge for water based on volumetric usage, and sets out three methods which the mobilehome park may use to calculate the volumetric usage; and
   2. for any recurring fixed charge that is charged to the mobilehome park by the water purveyor, that the park may bill residents for this fixed charge either by the resident’s proportion of the park’s total volumetric usage of water, or by billing the residents equally for their share of the total. (Civil Code §798.40(c)(2))
9. Establishes limits on the billing, administrative, or other fee charged by the park for management’s and the billing agent’s costs in billing residents separately for their submetered water. This fee must be the lesser of either $4.75, or 25 percent of the amount billed for each resident’s volumetric usage. The maximum fee under this paragraph can be adjusted annually based on a commensurate increase in the Consumer Price Index based on a California fiscal year average for the previous fiscal year, for all urban consumers, as determined by the Department of Finance. (Civil Code §798.40(c)(3))
10. Authorizes any mobilehome park management to bill homeowners separately for fees and charges assessed by the utility provider of natural gas or liquid propane gas, electricity, water, cable television, garbage or refuse service, or sewer service for the residents’ spaces in the park, unless the rental agreement states otherwise.

States that separate utility fees and charges are not rent, or to be considered a rent increase for the purposes of any local ordinance or rule for rent control, as long as base rent calculations for the space are reduced by the separately-billed fees and charges when separate billing has begun. (Civil Code §798.41)

1. Requires parks to separately state any utility fees and charges for such utility services on any monthly or other periodic billing to the homeowner. If the fee or charge has a limited duration or is amortized for a specified period, the expiration date shall be stated on the initial notice and each subsequent billing to the homeowner while the fee or charge is billed to the homeowner. (Civil Code §798.41(d))

This bill:

1. Prohibits the CPUC from making an order for the payment of reimbursement when customers file complaints against mobilehome parks that provide water service from their own water supplies and facilities (not a master-meter/submeter arrangement) upon the ground of unjustness or unreasonableness if the rate in question complies with limitations on charges and fees in connection with water utility service under the MRL for master-meter/submeter arrangements.
2. Provides that a person or other entity that maintains a mobilehome park or a multiple unit residential complex, and provides water service through a submeter service system, is exempt from regulation as a public utility if management of the mobilehome park complies with the limitations on charges and fees for master-meter/submeter arrangements established in the MRL.
3. Provides that those limitations on charges and fees in connection with water utility service apply to all management that elects to separately bill water utility service to homeowners under a master-meter/submeter arrangement, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the CPUC.

Background

Water utilities. California residents are served by an estimated 2,800 water providers of various types of water utilities or water systems, including publicly owned utilities, investor-owned utilities, and small community water systems. Nearly half of these systems (roughly 1,100 water providers) provide water to fewer than 200 customer service connections.

• Publicly owned water utilities. The majority of California’s residential water customers are served by cities, special districts, and mutual water companies. These utilities are not subject to economic regulation by the CPUC, but are instead governed by the city council, or other local governing body, which set water rates for customers.
• CPUC-regulated water utilities. The CPUC has regulatory oversight over water corporations that provide water service to about 16 percent of California’s residents. These water corporations generate annual water and wastewater revenues totaling about $1.4 billion. Approximately 95 percent of the residents served by water corporations are served by nine large water utilities, each serving more than 10,000 customer service connections (approximately a total of 1.175 million customers). As with other investor-owned utilities, the CPUC regulates rates of the water corporation under its jurisdiction.

Mobilehome parks. There are an estimated 508,589 mobile home units in California, according to the U.S. Census Bureau, 2021 American Community Survey 1-Year Estimates (2021). Mobilehome residents in California tend to be poorer and older than the average renter, for which mobilehome ownership is an important option for affordable housing. Many mobilehome residents own their mobilehome, but lease the land upon which their home is located from the mobilehome park that owns and manages the land and park. Under this relationship, while residents technically own their mobilehome, they pay rent to the park management and often rely on the park for the provision of utilities.

Master-meter service from a water utility. Mobilehome parks frequently provide water to tenants through a master-meter arrangement, whereby the park receives water service from a utility and then bills tenants for the cost of the water. In some cases, the management of the mobilehome park installs separate submeters to bill tenants individually. In these arrangements, the park owner handles the billing with the utility and then bills the park tenants/homeowners themselves. However, in many cases, some mobilehome parks provide tenants water service with their own water supplies and facilities, such as well water. In these cases, the mobilehome park owners are not master-metered, as they are not receiving service from a water utility.

Mobilehome Park Residency Law. The MRL was passed by the Legislature in 1978 to regulate the relationship between mobilehome park management and park residents, and establish various rights, responsibilities and limits of both groups. Over time, the MRL has been amended to include additional protections for residents and limits on charges mobilehome parks can bill residents. One of the subjects addressed by the MRL are utilities. Mobilehome parks can provide utilities to their residents in a number of ways, including as a master-meter providing submetered service. Parks can provide water services in this way as well, obtaining water from a separate utility or purveyor of water, and then providing that water to its residents and billing them separately from rent. In this arrangement, the mobilehome parks contract for and pay for the water to the utility, and then bill their residents separately for the service of managing and providing water from the water purveyor. Other mobilehome parks provide water services to their residents from a utility or water supply (such as from a well) owned by the park.

Mobilehome parks exempted from public utility regulation. In 1983, legislation was enacted, AB 1005 (Costa, Chapter 339, Statues of 1983), that exempts mobilehome parks that provide water service via a master-meter from regulation as a public utility including the need to obtain a certificate of public convenience and necessity (CPCN) and regulation by the CPUC. Specifically, Public Utilities Code §4505.5 provides that mobilehome parks that provide water service through a submeter service system are not a public utility if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation.

Legislation adopted to provide CPUC oversight for customer complaints. In the 1990s, in response to constituent complaints regarding the rates that were being charged for water service by mobilehome park owners/managers, AB 290 (Clute, Chapter 349, Statutes of 1991) and SB 585 (Craven, Chapter 689, Statutes of 1995) were enacted to authorize the CPUC to address tenant complaints at mobilehome parks providing water service with their own water supply (not master-meter with supply from a utility). The legislation provided that although these mobilehome parks were not public utilities, tenants of the parks could bring complaints to the CPUC to determine whether the rates charged are just and reasonable and service is adequate. The statute also afforded the CPUC with the authority to provide rate relief and direct the mobilehome park owners to upgrade service. This section of the Public Utilities Code §2705.6, was further expanded by legislation, AB 1830 (V.M. Pérez, Chapter 539, Statutes of 2012) which stipulated that the CPUC could review rates where at least 10 percent of tenants within a 12-month period filed complaints that the rates are not just and reasonable. The legislation also required the mobilehome park to provide written notice to tenants about their rights to file complaints with the CPUC. The bill also required the mobilehome park to reimburse tenants if rates are found to be unjust and unreasonable.

AB 1061 (Lee, Chapter 625, Statutes of 2021). AB 1061 was enacted to help address concerns that mobilehome parks were charging arbitrary administrative fees. The bill establishes specific limits on what mobilehome parks can charge residents when they provide submetered water services as part of a master-meter arrangement whereby the park owner receives water service from a utility or other third-party water provider. These limits tied charges to each residents’ proportional, volumetric usage of the park’s water, and limited additional administrative charges for providing submetered service to the lesser of either $4.75 or 25 percent of a resident’s volumetric usage. This $4.75 limit was modeled after SB 7 (Wolk, Chapter 623, Statutes of 2016), a bill passed in 2017 that similarly regulated how submetered water service can be billed in the context of apartment buildings. Through this rubric, AB 1061 provided exact formulas for how the charges may be calculated by mobilehome park management, and sought to limit unscrupulous parks from padding their water service fees and profiting from this master-meter/submetered arrangement.

Comments

Need for this bill. The proponents of this bill contend that some mobilehome park owners argue that they are not subject to AB 1061 and its formula because they receive or provide service that is regulated by the CPUC. The author of this bill asked Legislative Counsel “whether section 798.40 [Civil Code] applies to the management of an MHP [mobilehome park] that elects to separately bill water service to a homeowner as a utility service, and to provide submetered water to homeowners, if that MHP is a master-meter customer of a CPUC-regulated water corporation.” According to the Legislative Counsel Opinion shared with the committee, Legislative Counsel Opinion Request #2302359 (April 4, 2023) concluded that “section 798.40 applies to the management of an MHP that elects to separately bill water service to a homeowner as a utility service, and to provide submetered water to homeowners, if that MHP is a master-meter customer of a CPUC-regulated water corporation.”

Although Legislative Counsel’s Opinion would suggest no additional legislation is needed, this bill seeks to clarify and explicitly state, through amendments to Section 798.40 of the Civil Code and Sections of the Public Utilities Code, that Section 798.40 and its subdivisions apply to all mobilehome parks that provide submetered water services to its tenants, and that such a park is not under the jurisdiction, control, or regulation of the CPUC. The changes to the Civil Code relate to the application of master-meter/submeter utility water service provided by mobilehome parks. However, the changes to Public Utilities Code §2705.6 relate to mobilehome parks that provide water service only to tenants from water supplies and facilities owned by the mobilehome park. As such, these facilities are not a master-metered arrangement that would necessitate the application of Civil Code §798.40. The Legislative Counsel Opinion also never noted the relevance of Public Utilities Code §2705.6 to the application or implementation of Civil Code §798.40. In this regard, the author and committee may wish to amend this bill by deleting the changes to Public Utilities Code §2705.6.

Double referral: This bill passed out of the Senate Committee on Judiciary by a vote of 9-2 on June 20, 2023.

Prior/Related Legislation

AB 1061 (Lee, Chapter 625, Statutes of 2021) prohibited mobile home park management from charging residents more than their proportional share of the water service charges paid by the mobile home park to the water provider, plus a reasonable management fee.

SB 1117 (Monning, Chapter 164, Statutes of 2020) ensured consumer protections for electrical and gas service are extended to tenants of mobilehome parks and other similar residential complexes.

SB 7 (Wolk, Chapter 623, Statutes of 2016) required, as of January 1, 2018, that individual water meters, also called submeters, be installed on all new multifamily residential units or mixed commercial and multifamily units, and requires that landlords bill residents for the increment of water they use.

AB 1830 (V.M. Pérez, Chapter 539, Statutes of 2012) authorized the CPUC to order a mobilehome park to reimburse a tenant, if it finds that the park has charged an unreasonable rate for tenant water services.

SB 585 (Craven, Chapter 689, Statues of 1995) extended indefinitely the January 1, 1995 sunset of AB 290 (Clute, 1991) that established CPUC jurisdiction over the complaints of tenants of mobilehome parks that provide water service to their own residents through their own facilities.

AB 290 (Clute, Chapter 349, Statutes of 1991) which provided that, although mobilehome parks providing tenants water service with their own water supply were not public utilities, the CPUC can investigate complaints from tenants and award rate relief. The bill had a sunset of January 1, 1995.

AB 1005 (Costa, Chapter 339, Statues of 1983) exempted owners of mobilehome parks or a multiple unit residential complex and provides water service to users through a submeter service system if each is charged at the rate which would be applicable if the user were receiving water directly from the water public utility.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

Golden State Manufactured-home Owners League, Sponsor
County of Santa Cruz

Santa Cruz County Manufactured and Mobile Home Commission

OPPOSITION:

California Mobilehome Parkowner’s Alliance
Western Manufactured Housing Communities Association

ARGUMENTS IN SUPPORT: According to the author:

AB 1061 [Lee] which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee. However, since then, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. AB 604 amends the Civil Code to clarify the scope of its protections to include all mobilehome residents.

ARGUMENTS IN OPPOSITION: According to the Western Manufactured Housing Communities Association (WMA):

Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. If the State of California values water conservation and CPUC regulatory authority, AB 604 as drafted should be defeated as it does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies. The CPUC should serve as the model for water delivery, conservation and reimbursement given their expertise in this area. We should have the experts create this policy, not arbitrary legislation that has unintended consequences.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 604 (Author:Lee)

Version: February 9, 2023

Hearing Date: June 20, 2023

Fiscal: Yes

Urgency: No

Consultant: ID

SUBJECT

Mobilehome parks: water utility charges

DIGEST

This bill clarifies that all mobilehome parks that elect to provide submetered water service and bill separately for that service are subject to a requirement previously passed under AB 1061 (Lee, Ch.625, Stats. 2021) that they charge proportional rates for such submetered water service, regardless of whether the water provider is under the jurisdiction, control, or regulation of the Public Utilities Code. It also prohibits an order by the Public Utilities Commission for payment of reimbursement to residents for rates charged to them for unreasonableness or unjustness when that rate conforms with the proportional rate requirements under AB 1061 for submetered water service.

EXECUTIVE SUMMARY

AB 604 addresses the issue of whether AB 1061 (Lee, Ch. 625, Stats. 2021) applies to all mobilehome parks that provide submetered water services by amending the Civil Code and the Public Utilities Code to state specifically that parks that provide such submetered water must comply with the formulas for rates under AB 1061 and would not be under the jurisdiction of the California Public Utilities Commission (CPUC).

AB 604 is sponsored by the Golden State Manufactured-Home Owners League. It also is supported by the Santa Cruz County Manufactured and Mobilehome Commission. Supporters of the bill argue that it is necessary to prevent mobilehome parks from charging residents excessive charges beyond the actual charges for the water they submeter to their residents, and therefore prevents parks from pocketing additional profits from their residents. The bill is opposed by the Western Manufactured Housing Communities Association, who argue that mobilehome parks have high costs related to maintaining park water systems, that the bill would not encourage water conservation, and that the bill would undermine CPUC authority.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Creates the Mobilehome Residency Law (MRL) to regulate the relationship between mobilehome park management and park residents, and establish various rights, responsibilities and limits of both groups. (Civ. Code § 798 et seq.)
2. Mandates that, if a mobilehome park provides both master-meter and submeter service of utilities to a homeowner, the park must separately state for each billing period the cost of the charges along with the opening and closing readings of the homeowner’s meter. The MRL also mandates that parks must post in a conspicuous place the specific current residential utility rate schedule published by the serving utility, or the internet website address where the current residential utility rate is published by the utility. The park must make available free of charge the current rate upon a request of a resident, and must state that it is available in their posting. (Civ. Code § 798.40(a).)
3. Sets out limits on the rates that a mobilehome park can charge if the park elects to separately bill water service to a homeowner and provide submetered water service as a master-meter customer of the water purveyor. These limits are that:
   1. the park must charge for water based on volumetric usage, and sets out three methods which the mobilehome park may use to calculate the volumetric usage; and
   2. for any recurring fixed charge that is charged to the mobilehome park by the water purveyor, that the park may bill residents for this fixed charge either by the resident’s proportion of the park’s total volumetric usage of water, or by billing the residents equally for their share of the total. (Civ. Code § 798.40(c)(2).)
4. Establishes limits on the billing, administrative, or other fee charged by the park for management’s and the billing agent’s costs in billing residents separately for their submetered water. This fee must be the lesser of either $4.75, or 25% of the amount billed for each resident’s volumetric usage. The maximum fee under this paragraph can be adjusted annually based on a commensurate increase in the Consumer Price Index based on a California fiscal year average for the previous fiscal year, for all urban consumers, as determined by the Department of Finance. (Civ. Code § 798.40(c)(3).)
5. Defines “water purveyor” to mean any individual, firm, association, partnership, corporation, or public entity of any kind who furnishes water service to another individual, firm, association, partnership, corporation, or public entity. (Civ. Code § 798.40; Water Code §§ 512-513.)
6. Authorizes any mobilehome park management to bill homeowners separately for fees and charges assessed by the utility provider of natural gas or liquid propane gas, electricity, water, cable television, garbage or refuse service, or sewer service for the residents’ spaces in the park, unless the rental agreement states otherwise.
   1. States that separate utility fees and charges are not rent, or to be considered a rent increase for the purposes of any local ordinance or rule for rent control, as long as base rent calculations for the space are reduced by the separately-billed fees and charges when separate billing has begun. (Civ. Code § 798.41.)
7. Requires parks to separately state any utility fees and charges for such utility services on any monthly or other periodic billing to the homeowner. If the fee or charge has a limited duration or is amortized for a specified period, the expiration date shall be stated on the initial notice and each subsequent billing to the homeowner while the fee or charge is billed to the homeowner. (Civ. Code § 798.41(d).)
8. Provides that any person or corporation, and their lessees, receivers, or trustees appointed by any court, that maintains a mobilehome park or a multiple unit residential complex and provides, or will provide, water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC if each user of the submeter system is charged at the rate which would be applicable if the user were receiving water directly from the water corporation. (Public Utilities Code § 2705.5.)
9. Establishes that a mobilehome park that provides water only to its tenants from water supplies and facilities that it owns is not a water corporation. If a complaint is filed with the CPUC by tenants of the mobilehome park that represent 10% or more of the park’s water service connection during any 12-month period claiming that the water rates charged by the park are not just and reasonable or that the service is inadequate, CPUC shall have jurisdiction to determine the merits of the complaint.
   1. Requires a mobilehome park to provide written notice to each of the mobilehome park’s residents to inform those residents of their right to, and how to, file a complaint with the CPUC about the water rates charged or the service provided by the mobilehome park. Subjects a mobilehome park to penalty fees if the park fails to provide the required notice.
   2. Authorizes the CPUC to afford rate relief or order the mobilehome park to improve its water supply, facilities, and services on terms that it finds just and reasonable, or both.
   3. Requires, if the CPUC finds after investigation that the mobilehome park has charged an unjust or unreasonable rate, the CPUC to order the mobilehome park to reimburse the complainants and any other current and former tenants affected by the rate. Reimbursement shall be calculated from the first date of collection of the unjust or unreasonable rate, with interest.
   4. Prohibits the CPUC from ordering a park to reimburse tenants if the rate in question has been previously declared by a formal finding of the commission to be reasonable. (Public Utilities Code § 2705.6.)

This bill:

1. Clarifies that civil code section 798.40(c), establishing the limits on what mobilehome parks can charge when they provide submetered water service and separately bill residents, shall apply to all mobilehome park management that provide submetered and separately-billed water service, including to mobilehome parks where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the Public Utilities Commission.
2. Expands the list under the Public Utilities Code of mobilehome parks that are not subject to the jurisdiction, control, or regulation of the Public Utilities Commission to include mobilehome parks where management complies with the limits on submetered and separately billed water services charges under subdivision (c) of Section 798.40 of the Civil Code.
3. Establishes that the Public Utilities Commission, if investigating upon a complaint by residents the unjustness or unreasonableness of a water rate charged by a mobilehome park that owns its own water supplies and facilities, cannot make an order of payment of reimbursement for the rate being unreasonable or unjust if that rate complies with the limits on submetered and separately billed water services charges under civil code section 798.40(c).

COMMENTS

1. Author’s statement

According to the author:

AB 1061 which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee. However, since then, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. AB 604 amends the Civil Code to clarify the scope of its protections to include all mobilehome residents.

1. Clarifies law regarding water service charges of mobilehome residents

There are an estimated 508,589 mobile home units in California.^[1] Mobilehome residents in California tend to be poorer and older than the average renter, for which mobilehome ownership is an important option for affordable housing. Many mobilehome residents own their mobilehome, but lease the land upon which their home is located from the mobilehome park that owns and manages the land and park. Under this relationship, while residents technically own their mobilehome, they pay rent to the park management and often rely on the park for the provision of utilities.

The Mobilehome Residency Law (MRL) was passed by the Legislature in 1978 to regulate the relationship between mobilehome park management and park residents, and establish various rights, responsibilities and limits of both groups. Over time, the MRL has been amended to include additional protections for residents and limits on charges mobilehome parks can bill residents.

One of the subjects addressed by the MRL are utilities. Mobilehome parks can provide utilities to their residents in a number of ways, including as a master-meter providing submetered service. Parks can provide water services in this way as well, obtaining water from a separate utility or purveyor of water, and then providing that water to its residents and billing them separately from rent. (Cal. Civil Code § 798.41.) In this arrangement, the mobilehome parks contract for and pay for the water to the utility, and then bill their residents separately for the service of managing and providing water from the water purveyor. Other mobilehome parks provide water services to their residents from a utility or water supply (such as from a well) owned by the park.

The MRL has, over time, included various provisions regulating how mobilehome parks can charge their residents for these submetered water services, and at the same time the Public Utilities Code has been amended to create an avenue for residents to file complaints with the CPUC when a mobilehome park that owns its own water utility or water supply overcharges its residents. The Public Utilities Code further specifies that the CPUC has jurisdiction over water corporations as public utilities, and specifies various instances where a mobilehome may not be considered a public utility or water corporation under the jurisdiction, control, or regulation of the CPUC.

1. This bill and the problem it aims to fix

Before AB 1061 was passed into law, mobilehome parks often charged residents an additional, administrative charge for the costs of managing and providing submetered water service. When AB 1061 was before the Legislature, the author argued that changes to the law were necessary because mobilehome parks often overcharged residents through this additional, service charge, thereby making a profit off providing submetered water to their residents. There had been reports that such service fees are arbitrarily-determined and sometimes doubled without warning.^[2] Considering that many mobilehome residents are low-income or living on a fixed income, such arbitrary charges and increases can have a real impact on residents.

AB 1061 (Lee, Ch. 625, Stats. of 2021) addressed this issue by creating specific limits on what mobilehome parks can charge residents when they provide submetered water services. These limits tied charges to each residents’ proportional, volumetric usage of the park’s water, and limited additional administrative charges for providing submetered service to the lesser of either $4.75 or 25% of a resident’s volumetric usage. This $4.75 limit was modeled after SB 7 (Wolk, Ch. 623, Stats. 2016), a bill passed in 2017 that similarly regulated how submetered water service can be billed in the context of apartment buildings. (Civ. Code section 1954.205.) Through this rubric, AB 1061 provided exact formulas for how the charges may be calculated by mobilehome park management, and sought to limit unscrupulous parks from padding their water service fees and profiting from this submetering arrangement.

However, because the Public Utilities Code regulates public utilities and water corporations, arguments have been made since the passage of AB 1061 that some mobilehome parks are not subject to AB 1061 and its formulas for billing for submetered service because they are regulated by the CPUC. On this issue, the author of this bill asked Legislative Counsel “whether section 798.40 applies to the management of a [mobilehome park] that elects to separately bill water service to a homeowner as a utility service, and to provide submetered water to homeowners, if that [mobilehome park] is a master-meter customer of a CPUC-regulated water corporation.”^[3] Legislative Counsel concluded that “section 798.40 applies to any owner of a [mobilehome park] that elects to separately bill water service to a homeowner as a utility service, and to provide submetered water to homeowners, if that [mobilehome park] owner is a master-meter customer of a CPUC-regulated water corporation.” Accordingly, this bill seeks to clarify and explicitly state, through amendments to Section 798.40 of the Civil Code and Sections of the Public Utilities Code, that Section 798.40 and its subdivisions apply to all mobilehome parks that provide submetered water services to its residents, and that such a park is not under the jurisdiction, control, or regulation of the CPUC.

1. Support

According to the Golden State Manufactured-home Owners League (GSMOL), the bill’s sponsor:

In 2021, Assembly Member Lee championed AB 1061, which extended consumer protections to residents living in mobilehome. These protections were approved by the state to protect consumers of water in sub-metered circumstances from excessive charges. We don’t object to paying for the water we consume. And, we should pay our pro-rata share of services charges water companies bill park owners. What isn’t fair is when water is sub-metered and then park owners mark up the price of water and in turn make an unfair profit. Some parks are making around a quarter million dollars a year. However, despite AB 1061 being passed into law, park owners continue to multiply water service charges to each home space throughout the park and in some cases they are making up their own charges. For this reason, GSMOL supports AB 604, which provides additional clarity.

1. Arguments in Opposition:

According to the Western Manufactured Housing Communities Association (WMA):

Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. If the State of California values water conservation and CPUC regulatory authority, AB 604 as drafted should be defeated as it does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies. The CPUC should serve as the model for water delivery, conservation and reimbursement given their expertise in this area. We should have the experts create this policy, not arbitrary legislation that has unintended consequences.

SUPPORT

Golden State Manufactured-home Owners League, Inc. (Sponsor)
Santa Cruz County Board of Supervisors

Santa Cruz County Manufactured and Mobilehome Commission

OPPOSITION

Western Manufactured Housing Communities Association

RELATED LEGISLATION

Pending Legislation

AB 318 (Addis, 2023) amends Section 18806 of the Health and Safety Code relating to extending the Mobilehome Residency Law Protection Program within the Department of Housing and Community Development that resolves complaints from homeowners relating to the Mobilehome Residency Law. Extends the program to January 1, 2027. The bill is currently in front of the Rules Committee in the Senate.

AB 319 (Connolly, 2023) extends previously-passed provisions that require the Department of Housing and Community Development to enforce the Mobilehome Parks Act from January 1, 2024 to January 1, 2025, and makes some changes to fees for enforcement and rules for inspectors. The bill is currently in the Housing Committee of the Senate.

Prior Legislation

AB 1061 (Lee, Ch. 625, Stats. 2021) created limits on how much mobilehome parks can charge park residents for water service when the park provides submetered water service by requiring that such charges be based on residents’ actual volumetric water usage and that any service fee charged be the lesser of 25% of the volumetric charge or $4.75.

SB 1117 (Monning, Ch. 164, Stats. 2020) ensured consumer protections for electrical and gas service are extended to tenants of mobilehome parks and other similar residential components.

AB 1830 (Pérez, Ch. 539, Stats. 2012) authorized the CPUC to order a mobilehome park to reimburse tenants if, upon a complaint from at least ten percent of park residents, the CPUC finds that the park charged an unreasonable rate for water services when the mobilehome park provides water from water supplies and utilities it owns.

SB 1163 (Dunn, Ch. 728, Stats. 2004) provided that, where the management provides both master-meter and submeter service of utilities to a homeowner, for each billing period the cost of the charges for the period shall be separately stated along with the opening and closing readings for their meter. The management shall post in a conspicuous place the prevailing residential utilities rate schedule as published by the serving utility.

PRIOR VOTES:

Assembly Floor (Ayes 49, Noes 13)

Assembly Appropriations Committee (Ayes 11, Noes 4)

Assembly Housing and Community Development Committee (Ayes 6, Noes 2)

**************

1. U.S. Census Bureau, 2021 American Community Survey 1-Year Estimates (2021), available at https://data.census.gov/. ↑

2. Sheila Pell, “Mobile-home owner sees water bill jump,” San Diego Reader (Dec. 8, 2017), available at https://www.sandiegoreader.com/news/2017/dec/08/stringers-mobile-home-owner-sees-water-bill-jump/. ↑

3. Leg. Counsel Opinion Request #2302359 (Apr. 4, 2023). ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 604

Author:(Lee)

As Introduced Ver:February 9, 2023

Majority vote

SUMMARY

Applies existing rules regarding mobilehome park management's separate billing of water service provided via submeter to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the Public Utilities Commission (CPUC).

Major Provisions

1. Applies existing rules regarding mobilehome park management's separate billing of water service provided via submeter, as specified, to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the CPUC.
2. Clarifies that if park management complies with existing rules for submetered billing of water service, any person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC.
3. Prohibits the CPUC, in investigating a water rate or service complaint by tenants of a mobilehome park that provides water service to its tenants from water supplies and facilities that it owns, from making an order for payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question complies with the rules subject to 1), above.

COMMENTS

Mobilehome parks and water billing practices. Water service within mobilehome parks can be organized in several different ways. Some mobilehome parks provide water service to park residents by buying the water from a water supplier, passing the water on to the residents through a submeter, and then sending a bill to each resident. That water bill generally includes a charge for the amount of water the resident consumed and one or more additional water service fees. The law previously capped those additional water service fees at the amount that the water supplier could have legally charged each resident if the water supplier was delivering the water to the residents directly. However, it may in fact cost the park less than that to deliver water to the residents, meaning unscrupulous parks could potentially turn a profit by acting as the intermediary.

To prevent mobilehome parks from padding their water service fees and profiting off of the delivery of water in this way, AB 1061 (Lee), Chapter 625, Statutes of 2021, limited parks to charging tenants three separate amounts for water: one charge for the actual volume of water consumed, one charge to cover the resident's share of whatever recurring fixed amount the water supplier charges the park, and one charge to cover the park's administrative costs. Each charge is calculated according to specified formulas, including a standard service fee calculation of the lesser of 25% of the volumetric water charge or $4.75, thus preventing parks from padding resident's bills with unexplained additional fees. Additionally, the $4.75 service fee can be adjusted annually based on the Consumer Price Index (CPI), a standard measure that accounts for variation in the cost of consumer goods over time. This mirrors rules that were enacted by SB 7 (Wolk), Chapter 623, Statutes of 2016, which apply to master-meter/submeter systems in multi-family housing.

A subset of the mobilehome parks who buy water from a water supplier and pass the water on to residents through a submeter system are purchasing water from a water corporation that is subject to the jurisdiction of the CPUC. Existing law provides that those mobilehome parks are not considered public utilities subject to the jurisdiction of the CPUC if each use of the submeter service system is charged at the rate that would be applicable if the user were instead receiving water directly from the water corporation.

Other mobilehome parks own a water source – in many cases, a well – and provide water to their residents as the owner of the actual water supply. In response to concerns about water service in these mobilehome parks, the Legislature enacted changes in the 1990s which provided that, although mobilehome parks providing tenants water service with their own water supply were not utilities, the CPUC could investigate complaints from tenants and award "rate relief."

AB 1830 (Pérez), Chapter 539, Statutes of 2012, also expanded the CPUC's authority to order a park to provide restitution for past overcharges of water rates, as well as required mobilehome parks to provide notice of residents' right to file complaints about water rates and service with the CPUC. That bill also changed the authority for the CPUC to investigate rates and adequacy of water service if at least 10 percent of the population of a mobilehome park petitions the CPUC for relief.

This bill. Since AB 1061 (Lee) went into effect, a question has been raised regarding the applicability of the rate calculation rules to parks that are subject to CPUC oversight, either by virtue of purchasing water from a CPUC-regulated water corporation, or by providing water from supplies the park actually owns. This bill explicitly provides that the billing rules in AB 1061 (Lee) apply to instances where the water purveyor or the mobilehome park itself is subject to the jurisdiction, control, or regulation of the CPUC. This bill further provides that, for parks purchasing water from a CPUC-regulated water corporation, the park will continue to remain exempt from CPUC jurisdiction so long as management either continues to charge the rate which would be applicable if residents were direct customers of the water corporation, or charges the rates based on the calculations established in AB 1061 (Lee). For parks that own their own water source and submeter that water to residents, the bill provides a "safe harbor" exception in an instance where the CPUC has been petitioned under the AB 1830 (Pérez) process for rate relief by prohibiting the CPUC from ordering a mobilehome park to reimburse water charge overages if the water rates were calculated in accordance with the AB 1061 (Lee) methodology.

According to the Author

"AB 1061 which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee.

"However, since them, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. AB 604 amends the Civil Code to clarify the scope of its protections to include all mobilehome residents."

Arguments in Support

According to the Golden State Manufactured-home Owners League (GSMOL), the bill's sponsor, "In 2021, Assembly Member Lee championed AB 1061, which extended consumer protections to residents living in mobilehome. These protections were approved by the state to protect consumers of water in sub-metered circumstances from excessive charges. We don't object to paying for the water we consume. And, we should pay our pro-rata share of services charges water companies bill park owners. What isn't fair is when water is sub-metered and then park owners mark up the price of water and in turn make an unfair profit. Some parks are making around a quarter million dollars a year. However, despite AB 1061 being passed into law, park owners continue to multiply water service charges to each home space through the park and in some cases they are making up their own charges. For this reason, GSMOL supports AB 604, which provides additional clarity."

Arguments in Opposition

According to the Western Manufactured Housing Communities Association (WMA), "Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. If the State of California values water conservation and CPUC regulatory authority, AB 604 as drafted should be defeated as it does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies. The CPUC should serve as the model for water delivery, conservation and reimbursement given their expertise in this area. We should have the experts create this policy, not arbitrary legislation that has unintended consequences."

FISCAL COMMENTS

According to the Assembly Committee on Appropriations, the CPUC anticipates negligible costs as a result of this bill and asserts the language in the bill is redundant and unnecessary.

VOTES

ASM HOUSING AND COMMUNITY DEVELOPMENT: 6-2-0

YES: Wicks, Wendy Carrillo, Gabriel, Juan Carrillo, Quirk-Silva, Ward

NO: Joe Patterson, Sanchez

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Wilson

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Bryan

UPDATED

VERSION: February 9, 2023

CONSULTANT: Nicole Restmeyer / H. & C.D. / (916) 319-2085 FN: 0000224

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 604

Author:(Lee) – As Introduced Ver:February 9, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill applies existing rules regarding mobilehome park management’s separate billing of water service provided via submeter to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the Public Utilities Commission (CPUC), and makes other clarifying changes.

Specifically, this bill:

1. Applies existing rules regarding mobilehome park management’s separate billing of water service provided via submeter to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the CPUC
2. Clarifies if park management complies with existing rules for submetered billing of water service, as specified, any person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC.
3. Prohibits the CPUC, in investigating a water rate or service complaint by tenants of a mobilehome park that provides water service to its tenants from water supplies and facilities that it owns, from making an order for payment of reimbursement on the grounds of unjustness or unreasonableness if the rate in question complies with the rules described in 1).

FISCAL EFFECT:

The CPUC anticipates negligible costs as a result of this bill and asserts the language in the bill is redundant and unnecessary.

COMMENTS:

1. Purpose. According to the author:

AB 1061 which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee. However, since then, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. [This bill] amends the Civil Code to clarify the scope of its protections to include all mobilehome residents, including those in parks are subject to CPUC oversight.

1. Background. If the management of a mobilehome park uses individual water submeters to bill for water, existing law, AB 1061 (Lee), Chapter 625, Statutes of 2021, requires park management to charge mobilehome owners for water based on the owner’s actual volumetric water usage and a service fee limited to the lesser of 25% of the volumetric charge or $4.75, adjusted for inflation. Since AB 1061went into effect, mobilehome owners indicate some park owners have questioned the applicability of the rate calculation rules to parks subject to CPUC oversight, either by virtue of purchasing water from a CPUC-regulated water corporation, or by providing water from supplies the park owns.

This bill explicitly provides the billing rules in AB 1061 apply where the water purveyor or the mobilehome park itself is subject to the jurisdiction, control, or regulation of the CPUC.

Existing law authorizes the CPUC to regulate public utilities, including water corporations. Under existing law, a person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC, as long as each user of the submeter service system is charged the rate that would apply if the user were receiving the water directly from the water corporation.

Under existing law, a mobilehome park that provides water service to its tenants from only water supplies and facilities it owns, not otherwise dedicated to public service, is not a water corporation. However, the mobilehome park is subject to CPUC jurisdiction if a complaint is filed with the CPUC by tenants representing 10% or more of the park’s water service connections during any 12-month period, claiming the water rates are not just and reasonable or the service is inadequate. In this circumstance the CPUC has jurisdiction to determine the merits of the complaint and whether the rates charged are just and reasonable and whether the water service provided is adequate.

This bill clarifies, for a park purchasing water from a CPUC-regulated water corporation, the park remains exempt from CPUC jurisdiction so long as management either continues to charge the rate which would be applicable if residents were direct customers of the water corporation or charges rates based on the calculations established in AB 1061 (Lee). For parks that own their own water source and submeter that water to residents, the bill prohibits, when the CPUC has been petitioned for rate relief by tenants, the CPUC from ordering a mobilehome park to reimburse water charge overages if the water rates were calculated in accordance with the AB 1061 methodology.

1. Arguments in Support. According to the Golden State Manufactured-home Owners League (GSMOL), the bill’s sponsor:

In 2021, AB 1061 extended consumer protections to residents living in mobilehome parks. These protections were approved by the state to protect consumers of water in sub-metered circumstances from excessive charges. We don’t object to paying for the water we consume. And, we should pay our pro-rata share of service charges water companies bill park owners. What isn’t fair is when water is sub-metered and then park owners mark up the price of water and in turn make an unfair profit.

1. Arguments in Opposition. According to the Western Manufactured Housing Communities Association (WMA), in opposition:

Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. [This bill] as drafted does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies.

1. Prior Legislation. In addition to AB 1601, the Legislature has considered the following:

SB 1117 (Monning), Chapter 164, Statutes of 2020, extended consumer protections for electrical and gas service to tenants of mobilehome parks and other similar residential complexes.

SB 7 (Wolk), Chapter 623, Statutes of 2016, required separately-metered water bills in multi-family residential rental housing to be transparent and to only include specified components.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: March 29, 2023

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

Buffy Wicks, Chair

ABPCA Bill Id:AB 604 (

Author:Lee) – As Introduced Ver:February 9, 2023

SUBJECT: Mobilehome parks: water utility charges

SUMMARY: Applies existing rules regarding mobilehome park management’s separate billing of water service provided via submeter to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the Public Utilities Commission (CPUC), and makes other changes. Specifically, this bill:

1. Applies existing rules regarding mobilehome park management’s separate billing of water service provided via submeter, as specified, to mobilehome parks whose water service is subject to the jurisdiction, control, or regulation of the CPUC.
2. Clarifies that if park management complies with existing rules for submetered billing of water service, as specified, any person or corporation that maintains a mobilehome park and provides water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC.
3. Prohibits the CPUC, in investigating a water rate or service complaint by tenants of a mobilehome park that provides water service to its tenants from water supplies and facilities that it owns, from making an order for payment of reimbursement upon the ground of unjustness or unreasonableness if the rate in question complies with the rules subject to 1).

EXISTING LAW:

1. Establishes the Mobilehome Residency Law (MRL) which regulates the rights, responsibilities, obligations, and relationships between mobilehome park management and park residents. (Civil Code (CC) 798 et seq.)
2. Requires that, if park management provides both master-meter and submeter service of utilities to a homeowner, for each billing period the cost of the charges for the period must be separately stated along with the opening and closing readings for the homeowner’s meter. Also requires management to post specified information regarding the current applicable utility rates. (CC 798.40)
3. Requires that, if park management elects to separately bill water service to a homeowner as a utility service and to provide submetered water service to homeowners as a master-meter customer of the water purveyor, as a part of the regular bill for water service, management must only bill a homeowner for the following water service:
   1. A charge for volumetric usage, calculated in any of the following ways:
      1. The proportion of the homeowner’s usage, as shown on the submeter, to the total usage as shown by the water purveyor’s billing;
      2. If the water purveyor charges for volumetric usage based on a tiered rate schedule, management may calculate the charge for a homeowner’s volumetric usage proportionally or may instead divide each tier’s volume evenly among the number of mobilehome spaces, and apply the rate for to each block to the consumption recorded for each mobilehome space;
      3. If the water purveyor charges the property rates on a per-mobilehome space basis, homeowners may be charged at those exact per-mobilehome space rates; and
      4. The charge for volumetric usage is prohibited from including in its calculation water used by or for any common area facility in the park, or water used by any other person or entity, other than the homeowner being billed.
   2. Any recurring fixed charge, however that charge may be designated, for water service billed to the property by the water purveyors that, at management’s discretion, must be calculated by either of the following:
      1. The homeowner’s proportion of the total fixed charges charged to management for the park’s water use, based on the percentage of the homeowner’s volumetric water use in relation to the total volumetric water use of the entire park, as shown on management’s water bill during that period; or
      2. Dividing the total fixed charges charged to the park equally among the total number of spaces at the park.
   3. A billing, administrative, or other fee representing the combined total of management’s and the billing agent’s costs, which must be the lesser of an amount not to exceed four dollars and seventy-five cents, as adjusted, or 25 percent of the amount billed for to the volumetric usage charge. Beginning January 1, 2022, management may adjust the maximum fee each calendar year, no higher than a commensurate increase in the Consumer Price Index based on a California fiscal year average for the previous fiscal year, for all urban consumers, as determined by the Department of Finance. (CC 798.40)
   4. Defines “water purveyor” to mean any individual, firm, association, partnership, corporation, or public entity of any kind who furnishes water service to another individual, firm, association, partnership, corporation, or public entity. (CC 798.40, Water Code (WATC) Section 512, WATC Section 513)
4. Provides for all of the following in relation to the provision of natural gas or liquid propane gas, electricity, water, cable television, garbage or refuse service, or sewer service at a mobilehome park:
   1. Authorizes management to bill homeowners separately for fees and charges assessed by the utility unless the rental agreement states otherwise;
   2. Specifies that separate utility fees and charges are not rent; and
   3. Outlines the procedures for adjusting base rent calculations under local rent control ordinances when a park switches to billing utility fees and charges separately from rent. (CC 798.41)
5. Requires parks to separately state any utility fees and charges for natural gas or liquid propane gas, electricity, water, cable television, garbage or refuse service, or sewer service on any monthly or other periodic billing to the homeowner. If the fee or charge has a limited duration or is amortized for a specified period, the expiration date shall be stated on the initial notice and each subsequent billing to the homeowner while the fee or charge is billed to the homeowner. (CC 798.41)
6. Provides that any person or corporation, and their lessees, receivers, or trustees appointed by any court, that maintains a mobilehome park or a multiple unit residential complex and provides, or will provide, water service to users through a submeter service system is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC if each user of the submeter system is charged at the rate which would be applicable if the user were receiving water directly from the water corporation. (Public Utilities Code Section 2705.5)
7. Establishes that a mobilehome park that provides water only to its tenants from water supplies and facilities that it owns is not a water corporation. If a complaint is filed with the CPUC by tenants of the mobilehome park that represent 10% or more of the park’s water service connection during any 12-month period, claiming that the water rates charged by the park are not just and reasonable or that the service is inadequate, CPUC shall have jurisdiction to determine the merits of the complaint.
   1. Requires a mobilehome park to provide written notice to each of the mobilehome park’s tenants to inform those tenants of their right to, and how to, file a complaint with the CPUC about the water rates charged or the service provided by the mobilehome park. Subjects a mobilehome park to penalty fees if the park fails to provide the required notice.
   2. Authorizes the CPUC to afford rate relief or order the mobilehome park to improve its water supply, facilities, and services on terms that it finds just and reasonable, or both.
   3. Requires, if the CPUC finds after investigation that the mobilehome park has charged an unjust or unreasonable rate, the CPUC to order the mobilehome park to reimburse the complainants and any other current and former tenants affected by the rate. Reimbursement shall be calculated from the first date of collection of the unjust or unreasonable rate, with interest. The CPUC is prohibited from ordering a park to reimburse tenants if the rate in question has been previously declared by formal finding of the commission to be reasonable. (Public Utilities Code (PUC) 2705.6)

FISCAL EFFECT: Unknown.

COMMENTS:

Author’s statement. According to the author, “AB 1061 which passed in 2021 prohibits mobilehome park management from charging its residents more than their proportional share of the water service charges paid by the park to the water utility or provider, in addition to the outlined management fee.

However, since them, park owner affiliated organizations have argued that certain mobile home parks are exempted from the statute as written. AB 604 amends the Civil Code to clarify the scope of its protections to include all mobilehome residents.”

Mobilehome parks and water billing practices. Water service within mobilehome parks can be organized in several different ways. Some mobilehome parks provide water service to park residents by buying the water from a water supplier, passing the water on to the residents through a submeter, and then sending a bill to each resident. That water bill generally includes a charge for the amount of water the resident consumed and one or more additional water service fees. The law previously capped those additional water service fees at the amount that the water supplier could have legally charged each resident if the water supplier was delivering the water to the residents directly. However, it may in fact cost the park less than that to deliver water to the residents, meaning unscrupulous parks could potentially turn a profit by acting as the intermediary.

To prevent mobilehome parks from padding their water service fees and profiting off of the delivery of water in this way, AB 1061 (Lee), Chapter 625, Statutes of 2021, limited parks to charging tenants three separate amounts for water: one charge for the actual water consumed, one charge to cover the resident’s share of whatever recurring fixed amount the water supplier charges the park, and one charge to cover the park’s administrative costs. Each charge is calculated according to specified formulas, including a standard service fee calculation of the lesser of 25 percent of the volumetric water charge or $4.75, thus preventing parks from padding resident’s bills with unexplained additional fees. Additionally, the $4.75 service fee can be adjusted annually based on the Consumer Price Index (CPI), a standard measure that accounts for variation in the cost of consumer goods over time. This mirrors rules that were enacted by SB 7 (Wolk), Chapter 623, Statutes of 2016 which apply to master-meter/submeter systems in multi-family housing.

A subset of the mobilehome parks who buy water from a water supplier and pass the water on to residents through a submeter system are purchasing water from a water corporation that is subject to the jurisdiction of the CPUC. Existing law provides that those mobilehome parks are not considered public utilities subject to the jurisdiction of the CPUC if each use of the submeter service system is charged at the rate that would be applicable if the user were instead receiving water directly from the water corporation.

Other mobilehome parks own a water source – in many cases, a well – and provide water to their residents as the owner of the actual water supply. In response to concerns about water service in these mobilehome parks, the Legislature enacted changes in the 1990s which provided that, although mobilehome parks providing tenants water service with their own water supply were not utilities, the CPUC could investigate complaints from tenants and award “rate relief.”

In 2009, residents of Sunbird mobilehome park located in the unincorporated community of Thermal filed a complaint with the CPUC because residents’ water bills were sometimes in excess of $500. Sunbird is an 87-space park which at the time was occupied by low-income families, many of them farm workers. In 2006, the park had instituted a rate structure with four tiers with a flat rate of $7.36 monthly service charge. One resident complained of receiving a monthly water bill of more than $1,000. After investigation, the CPUC found that the tier 3 and 4 rates at Sunbird reflected an increase of 2,781.3 percent and 5,754.9 percent, respectively, over tier 1 rates. In addition to the exorbitant water charges, the water sold was contaminated with arsenic, which was found to exceed the safe drinking water standard (Decision Setting Mobilehome Park Water Rates and Conditions of Water Service, and Mandating Related Accounts. (2012) Cal. P.U.C. Dec. No. 12-02-023).

The CPUC found that the Sunbird water rates were not just and reasonable and residents qualified for “rate relief” under current law. The CPUC suspended tier 3 and 4 rates but determined that it lacked authority to reimburse the residents for past overcharges even though residents had been overpaying for water for three years. AB 1830 (Pérez), Chapter 539, Statutes of 2012, thus expanded the CPUC’s authority to order a park to provide restitution for past overcharges of water rates, as well as required mobilehome parks to provide notice of residents’ right to file complaints about water rates and service with the CPUC. That bill also changed the authority for the CPUC to investigate rates and adequacy of water service if at least 10 percent of the population of a mobilehome park petitions the CPUC for relief.

This bill. Since AB 1061 (Lee) went into effect, a question has been raised regarding the applicability of the rate calculation rules to parks that are subject to CPUC oversight, either by virtue of purchasing water from a CPUC-regulated water corporation, or by providing water from supplies the park actually owns. This bill explicitly provides that the billing rules in AB 1061 (Lee) apply to instances where the water purveyor or the mobilehome park itself is subject to the jurisdiction, control, or regulation of the CPUC. This bill further provides that, for parks purchasing water from a CPUC-regulated water corporation, the park will continue to remain exempt from CPUC jurisdiction so long as management either continues to charge the rate which would be applicable if residents were direct customers of the water corporation, or charges the rates based on the calculations established in AB 1061 (Lee). For parks that own their own water source and submeter that water to residents, the bill provides a “safe harbor” exception in an instance where the CPUC has been petitioned under the AB 1830 (Pérez) process for rate relief by prohibiting the CPUC from ordering a mobilehome park to reimburse water charge overages if the water rates were calculated in accordance with the AB 1061 (Lee) methodology.

Arguments in support. According to the Golden State Manufactured-home Owners League (GSMOL), the bill’s sponsor, “In 2021, Assembly Member Lee championed AB 1061, which extended consumer protections to residents living in mobilehome. These protections were approved by the state to protect consumers of water in sub-metered circumstances from excessive charges. We don’t object to paying for the water we consume. And, we should pay our pro-rata share of services charges water companies bill park owners. What isn’t fair is when water is sub-metered and then park owners mark up the price of water and in turn make an unfair profit. Some parks are making around a quarter million dollars a year. However, despite AB 1061 being passed into law, park owners continue to multiply water service charges to each home space through the park and in some cases they are making up their own charges. For this reason, GSMOL supports AB 604, which provides additional clarity.”

Arguments in opposition. According to the Western Manufactured Housing Communities Association (WMA), “Unlike traditional site-built homes, manufactured housing communities are responsible for maintaining water systems for each space in mobilehome parks beyond the master-meter connection provided by the local governing water agency. The costs associated with maintaining mobilehome park water systems are significantly higher than for apartment buildings, which is why WMA believes the formula in AB 1061 was inadequate. If the State of California values water conservation and CPUC regulatory authority, AB 604 as drafted should be defeated as it does little to encourage residents of manufactured housing communities to conserve water and undermines the authority of the CPUC to adequately regulate water companies. The CPUC should serve as the model for water delivery, conservation and reimbursement given their expertise in this area. We should have the experts create this policy, not arbitrary legislation that has unintended consequences.”

Related legislation:

AB 1061 (Lee), Chapter 625, Statutes of 2021 required mobilehome park management to charge submetered water to homeowners based on their actual volumetric water usage and a service fee that is limited to the lesser of 25% of the volumetric charge or $4.75, adjusted for inflation.

SB 1117 (Monning), Chapter 164, Statutes of 2020 ensured consumer protections for electrical and gas service are extended to tenants of mobilehome parks and other similar residential complexes.

SB 7 (Wolk), Chapter 623, Statutes of 2016 specified that separately-metered water bills in multi-family residential rental housing must be transparent and may only include specified components.

AB 1830 (Pérez), Chapter 539, Statutes of 2012 authorized the California Public Utilities Commission (PUC) to order a mobilehome park to reimburse tenants if, upon a complaint from at least 10 percent of park residents, the Commission finds that the park has charged an unreasonable rate for water services.

REGISTERED SUPPORT / OPPOSITION:

Support

Golden State Manufactured-home Owners League (Sponsor)

Santa Cruz County Manufactured and Mobilehome Commission

Opposition

Western Manufactured Housing Communities Association

Analysis Prepared by: Nicole Restmeyer / H. & C.D. / (916) 319-2085